Facebook Tests Virtual-Currency Payment System

Facebook Inc. in May began testing a virtual-currency payment system for customized online greeting cards and prepaid gift cards in what the products' developers say is the first such test within the social-networking Web site. Facebook users may purchase products from GroupCard, a unit of Milwaukee-based Interactive Gift Corp., by selecting the "Pay with Facebook" option within Facebook's site. Previously users could only pay using a credit card. Users can buy a GroupCard product using Facebook credits, worth 10 cents each, with a credit card in Facebook's online gift shop. GroupCard, founded in 2007, sells downloadable greeting cards and posters, typically generated by groups of friends or colleagues for an individual recipient. Products cost $4.99 to $24.99 each, and the site also sells gift cards redeemable at Amazon.com. The company also sells its products through its own Web site, GroupCard.com, and cross-promotes them on a variety of other Web sites. During its test, Facebook will receive an undisclosed percentage of each GroupCard transaction, observers say. Such micropayments could become a new revenue stream for Palo Alto, Calif.-based Facebook, which claims 200 million users, if Facebook expands it to include other products and services. John Anderson, GroupCard co-founder and CEO, tells CardLine it is too early to know whether the Facebook virtual-payment option is boosting sales. "The theory is that Facebook users would have a stored account and would use it to buy a variety of items from various suppliers," he says, noting that, although most of GroupCard's sales come from the U.S., it has a growing number of international customers. Megan Bramlette, managing associate with Auriemma Consulting Group, tells CardLine Facebook's GroupCard test is part of "many iterations" of online-payment experiments. "Facebook is testing the waters to see if people are willing to use its site as a payment channel for various little products and applications," she says. "It remains to be seen if this kind of thing will resonate with most consumers."

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